A company-authorized dealer of baby formula has been linked to a ring making selling knockoff baby milk powder, a case that one analyst says highlights problems with government supervision of the industry. Police in Shanghai detained the dealer and eight other people from December 9, 2015, to January 7 this year on suspicion they produced and sold knockoff milk powder products, an official with a food-safety office under the cabinet said at a news conference in the capital on April 9…Full Article: Caixin Apr 2016

Key Points

In September 2015, Abbott Laboratories Trading (Shanghai) Co. Ltd. (Abbott’s subsidiary in China) informed police in Shanghai that about counterfeit infant formula products after it discovered inconsistencies with its products. As a result, law enforcement authorities in Shanghai seized 20,000 empty branded product containers and 65,000 pieces of labeling materials.

The arrested dealer was authorized to sell products from Beingmate Baby & Child Food Co. Ltd., which is based near Shanghai in Hangzhou. From August 2014 to May 2015, the Beingmate-authorized dealer repackaged high-priced branded products with lower-priced product, and then sold the counterfeit products to retailers in Zhengzhou (Henan Province) and Hefei (Anhui Province). The same dealer also repackaged other brands of infant formula, including those from New Zealand’s Vitacare and the USA’s Abbott Laboratories. These counterfeit products were sold to retailers in the provinces of Henan, Hubei, and Jiangsu.

ChinaAg Comments

In October 2015, Fonterra and Beingmate approved the establishment of an infant formula joint-venture. As part of the JV, Beingmate would own a 51% stake (Fonterra 49%) in Fonterra’s Darnum factory. Additionally, Beingmate would distribute Fonterra’s Anmum infant formula brand within mainland China.

In June 2015, Fonterra exported its first shipment of Anmum infant formula to mainland China.

In March 2015, Fonterra purchased an 18.8% stake in Beingmate Baby & Child Food Co Ltd. At the same time, Fonterra’s Chief Executive announced plans to invest NZ$1.5 billion (US$1.13 billion) in China and boost its production capacity to 1 billion liters by 2020.

In January 2015, China’s Ministry of Commerce approved Fonterra‘s request to purchase a 20 percent stake in Beingmate.

In August 2014, Fonterra announced plans to purchase a 20% stake (US$467 million) in Beingmate (based in Hangzhou, Zhejiang Province). Beingmate in return would hold a 51% stake in Fonterra’s Gippslands milk powder factory in Victoria, Australia (near Melbourne).

Established in 1992 and headquartered in Hangzhou, Zhejiang province, Beingmate produces and distributes infant food including milk substitutes, weaning foods and dietary supplements. The company also supplies toiletries, baby beddings, strollers, textiles and children’s toys.

Founded in 1888 and headquartered in northern Chicago, Abbott Laboratories produces and markets the branded children beverages of Pedialyte and PediaSure, as well as the branded infant formula products of Similac, Suplena, and EleCare.